South Korea's Ministry of Trade, Industry and Resources (Motir) and the Korea Fair Trade Commission have started a preliminary review of Lotte Chemical's proposed merger with Yeochun NCC (YNCC) as part of the country's initiative to restructure the petrochemical segment.
Under the proposed plan, Lotte Chemical will spin off part of its petrochemical operation in Yeosu, including its cracker and downstream units, establishing a new entity which will be merged with YNCC.
For the downstream sector, the shareholders of YNCC — DL Chemical and Hanwha Solutions — will sell part of their downstream assets to YNCC.
After the merger, Lotte Chemical, DL Chemical and Hanwha Solutions will each hold one-third stake in YNCC.
The new business will focus on producing high value-added products, including linear density polyethylene (LDPE) and polyolefin elastomer (POE) for medical use, according to a statement released by Motir.
This is the second merger review Motir is conducting after South Korea initiated a restructuring plan for its petrochemical industry to slash 2.7–3.7 mn t/yr of ethylene capacity, or up to 25pc of their total cracking capacity on August 2025.
Motir first approved the merger plan between Hyundai Chemical and Lotte Chemical in Daesan in February.
Lotte Chemical owns two crackers in South Korea — one in Yeosu with an ethylene capacity of 1.2 mn t/yr, and another in Daesan with ethylene capacity of 1.05 mn t/yr. YNCC operates three crackers in Yeosu — its No.1 cracker can produce up to 900,000t/yr ethylene, while its No. 2 and No. 3 crackers produce 915,000t/yr and 500,000t/yr of ethylene, respectively. YNCC's No. 3 cracker has been idled since August 2025 because of margin concerns.
Hanwha Solutions operates a 1.458 mn t/yr ethylene dichloride plant in Yeosu alongside a 330,000t/yr LDPE plant, and a 355,000t/yr linear low-density PE /high-density PE (LLDPE/HDPE) swing plant. Daelim has a 305,000t/yr HDPE unit and a 400,000t/yr LLDPE/HDPE swing plant in Yeosu.
The petrochemical industry in Asia has been suffering from negative margins since 2022 because of oversupply from expanding capacities in the region, especially in China. Weak downstream demand has further weighed on production margins, putting pressure on cracker operators since early 2022.
